Partial Offer at 5p Cash per Ordinary Share in London Asia Capital plc

In my last letter dated 18th September I said that your directors believed that our single largest investment in the unquoted shares of Zhongying Changjiang International Credit Company Limited (“Zhongying”) may have
real value. The Earl of Cromer and I have since returned from a visit to Wuhan and not only are we now confident that this investment has increased substantially in value but, as a result of our negotiations, we also
believe that the relationship between London Asia Capital plc and Wuhan Kaidi Group, our investment partners in Zhongying, can be greatly strengthened. This will be to the benefit both of shareholders who seek
the return of cash and of those who would prefer to see the company pursue a strategy of further investment in China. In this letter I would like to explain what we have in mind.

It has not been a simple matter to establish the quantum of our investment in Zhongying as much of the information previously provided to shareholders was incomplete or incorrect, but we have now calculated
that the company’s net investment was in excess of £10.2 million. This, however, was in partly paid shares and London Asia Capital plc has an overdue obligation to invest a further £3 million. The purpose of the
recent visit to Wuhan was with the aim of deciding whether or not we should invest this further £3 million and determining the consequences of failing to do so. Our first success was to agree in principle that the £3million be reduced to £600,000 with the Wuhan Kaidi Group taking the balance of our investment commitment. Apart from reducing the depletion of our cash, the willingness of Kaidi Group to increase its stake spoke volumes for their confidence in the value of Zhongying.

We were particularly encouraged by what we learned of the quality of the Zhongying investment portfolio. Their single largest asset is a parcel of residential development land on Wuhan East Lake. We took
independent advice on Wuhan property and confirmed an increase in values in recent years. Another of the investments, an agricultural business, was recently listed on the Shanghai Stock Exchange, realising a profit of 700% over the original investment. The majority of their remaining investments are in energy related enterprises with a strategy of divesting of businesses not related to renewable energy. When in Hong Kong
we sought independent advice as to the merits of Kaidi Group as an investment partner and the reports were most favourable. We concluded that at the very worst there had been no diminution in the value of our
investment and, at best, it had increased substantially in value. Even with no increase in the value of the underlying assets, the appreciation in the value of the RMB with respect to Sterling since the date of
investment from RMB15 to RMB11 took the value of our shares in Zhongying to £13.5 million, equivalent to more than 50% the net assets of London Asia Capital plc today.

During our discussions with Mr Chen Yilong, Chairman of Kaidi Group, the possibility of a closer relationship between our companies was discussed. The talks progressed to the possibility of Kaidi making an Partial Offer
at 5 pence per London Asia Capital plc share in cash to all existing shareholders or subscribing for new shares at 5 pence per shares or a combination of both buying shares from shareholders who wish to sell and
subscribing for new shares. Mr. Chen is a highly respected entrepreneur in both business and political circles in China and your directors are very excited at the prospect of Kaidi taking such a significant stake in your
company and the opportunities this will bring in the future.

The advantages to both companies are clear. Kaidi gains low cost access to western capital markets, which, of course, means that London Asia Capital plc will relist, while your company will gain a successful partner in
China, whose investment offers tremendous potential for the future whilst underpinning the value of the existing investment in Zhongying at £13.5 million. These talks continue and a further statement will be made
as soon as possible. You are, therefore, strongly advised not to sell your shares at this time.

In the meantime the unaudited net asset value of London Asia Capital plc today is:

£m

p/share

Cash

5.0

2.2

Readily saleable quoted shares

3.3

1.4

Cash or near cash

8.3

3.6

Less readily saleable shares

2.8

1.2

(will need to be discounted)

Cash and quoted shares

11.1

4.8

Zhongying unquoted shares

13.5

5.9

(illiquid and a long term investment)

Total net assets per share

£24.6m

10.7p

In the short term, as part of a policy of liquidation, it might be possible to return as much as 4p in cash per share to shareholders in May of 2010 after gaining the approval of the Court for a capital reduction. However,
this would leave only the Zhongying shares and the prospects of selling these would be bleak without the support of Kaidi Group.

It remains our intention to hold an AGM on 27th November at which we will seek shareholder approval for the 2007 accounts. We also plan to send to shareholders a summary of our findings with regard to the activities of my predecessor, Mr Simon Littlewood, an expanded version of which will be sent to the appropriate authorities in due course. The accounts for 2008 and 2009 will be presented to shareholders at AGMs to be held early in 2010.